Over the weekend, I was watching The Empire Strikes Back and I was struck by the character Lando Calrissian.
For those of you who don't know, Lando is a smuggler/rogue gone businessman played by Billy Dee Williams. In order to protect his business and personal interests, he makes a deal with the Dark Side – literally – and sells out his old friend Han Solo to Darth Vader. By making this deal, Vader agrees to leave Lando's operations in tact without the oppressive presence of his goon squad. Lando keeps up his end of the bargain by turning over Solo and friends to Darth Vader, but almost immediately the deal changes. Vader decides he wants something else. Then he wants something else. Then he wants something else. Throughout all of this, Lando keeps saying “this wasn't the deal” or “I'm disliking this deal more and more”.
What does this have to do with business? Everything.
When you begin negotiationg a deal, document everything. Keep all emails, log all calls, log all discussions, keep copious notes. Even with all of those notes, it's very easy for one party to say “well, I didn't say that” and things can get costly. Clearly delineate both sides' requirements, involvement, and responsibilities. If you need information in order to make a recommendation, explicitly state it. If there are accounts, services, etc that the other side must obtain for completion of the project, explicitly state them.
Then, don't just settle things on a handshake, get it all in writing and have both sides sign it. If you have a contract signed by both sides, it makes challenging/renegotiating any agreements much more difficult. Some believe that making contract renegotiations difficult is bad, but any contract can be renegotiated at any time quite simply. Draw up a new contract and say “this superceeds all previous agreements”. Not having a lawyer is not an excuse either. To initiate CaseySoftware, I was able to purchase and download a variety of legal templates from Nolo.com for under $100. Once you purchase these, the only recurring cost is customizing the document for your situation. Spend the thirty minutes to customize whether you are negotiating a 100k deal or a 1k deal. It's an investment that can only save you time and difficulties later.
Now, I'll be the first to admit that I've made mistakes in this way. My first entrepreneurial venture crashed because I trusted some people and thought we had the same goals in mind without getting it in writing. Unfortunately, we did not have the same goals and friendships were strained and broken. In founding CaseySoftware, I've kept this in mind, but I will be the first to admit that we have a few customers which work on a handshake/email agreement. As we grow and bring on more developers and customers, we are steadily moving away from this.
In summary, simply get it all in writing. It will protect you, protect your customer, define to both sides know what is expected, and they can be renegotiated at any time with little effort.
Obviously, this would not have done anything to help Lando, but maybe that's a larger lesson about not compromising your morals…